Greenspan, Rubin, and a Roomful of Hypocrites

"There is a lot of amnesia that's emerging, apparently," former Federal Reserve Chairman Alan Greenspan told the Financial Crisis Inquiry Commission on Wednesday. He's appalled that we don't remember the Alan Greenspan who fought for more regulation and led a crusade to stomp out predatory lending.

And we don't. Because he didn't. Greenspan's testimony, along with cameos by former Treasury Secretary Robert Rubin and Citigroup (NYSE: C) executive Tom Maheras, are classic examples of soaking up adulation and nine-figure paydays during the run-up of a bubble only to plead ignorance after it pops.

Greenspan's rambling reply was that he and the Fed actually tried to warn everyone of its hazards and even attempted to do something about it to no avail. He backs up his regulator-in-chief stance by noting:

In 2001, we issued our "Expanded Guidance for Subprime Lending Programs." This guidance warned regulated institutions that loans designed to serve borrowers with impaired credit "may be prone to rapid deterioration in the early stages of an economic downturn," and imposed requirements for internal controls to protect against such risks.

This took me off guard -- it didn't sound like something laissez-faire commander Greenspan would say. So I looked up the report and quote in full context and found this:

Although subprime lending is generally associated with higher inherent risk levels, properly managed, this can be a sound and profitable business. Because of the elevated risk levels, the quality of subprime loan pools may be prone to rapid deterioration, especially in the early stages of an economic downturn. Sound underwriting practices and robust effective control systems can provide the lead time necessary to react to deteriorating conditions, while sufficient allowance and capital levels can reduce its impact.

All the report says is that subprime can be safe and sound provided it's done in a safe and sound manner ... which it isn't, wasn't, and never will be. Subprime and "sound underwriting practices" is oxymoron to the extreme. Like a prudent round of Russian roulette.

But more importantly, the report Greenspan mentions is simply a guidelines statement. The word "should" is mentioned 58 times in the report, and specifically states, "we expect institutions to recognize that the elevated levels of credit and other risks arising from these activities require more intensive risk management." Just expect banks to behave, bow to your Ayn Rand shrine, and call it good.

At any rate, we know how Greenspan felt about subprime when he used blunter language. In 2005, he wrote:

Where once more-marginal applicants would simply have been denied credit, lenders are now able to quite efficiently judge the risk posed by individual applicants and to price that risk appropriately. These improvements have led to rapid growth in subprime mortgage lending; indeed, today subprime mortgages account for roughly 10 percent of the number of all mortgages outstanding, up from just 1 or 2 percent in the early 1990s.

But apparently we're the ones suffering from amnesia.

Next, Greenspan tackled credit derivatives. Brooksley Born, the former chairwoman of the Commodity Futures Trading Commission who was famously ostracized for her derivatives warnings a decade ago, asked Greenspan to comment on AIG's (NYSE: AIG) fatal use of credit default swaps (CDSes). His answer is a spectacle of denial:

[AIG] was selling insurance. They could just as easily have sold and gotten into the same trouble by issuing insurance instruments rather than credit default swaps. My understanding is the reason they did that is because there were [different] capital requirements, but that is not an issue of the credit default swaps per se.

No, that's exactly the issue per se. Banks love credit default swaps because they can gamble their brains out behind closed doors without setting aside a penny to cover losses like regular insurance products. Had CDSes been regulated like insurance, issuers like AIG would have only been able to sell them to investors actually insuring something (not "naked" swaps that are purely speculative), and regulators would have forced issuers to set aside enough money to cover probable losses. But they weren't, and taxpayers paid dearly.

Exhibit B: Robert RubinNext in the hot seat was Rubin, a former Goldman Sachs (NYSE: GS) boss who became Treasury secretary under President Clinton. While in office, Rubin was instrumental in repealing Glass-Steagall regulations, which paved the way for the creation of Frankenstein financial behemoths -- particularly Citigroup. After leaving Washington in 1999, Citigroup named Rubin chairman of the executive committee, where he was paid $126 million over the next eight years -- call it $43,000 a day. Rolling Stone columnist Matt Taibbi gets the award for explaining this relationship: "they don't call it bribery in this country when they give you the money post factum."

Rubin's defense for Citigroup's misery boils down to the claim that he had no operational duties, and didn't realize the bank was choking to death on toxic mortgages until it was too late. He was more of a highly paid face, and "wasn't a substantive part of the decision-making process."

Others disagree. In November 2008, TheWall Street Journal reported that "Mr. Rubin was deeply involved in a decision in late 2004 and early 2005 to take on more risk to boost flagging profit growth." TheNew York Times quotes a former Citi executive as saying, "Rubin had always been an advocate of being more aggressive in the capital markets arena. He would say, 'You have to take more risk if you want to earn more.'"

And earn more he did, which gets to the heart of the matter. When you're making $15 million a year as the head of the executive committee, you're not an innocent bystander. You're responsible for the outcome whether it makes you look good or not.

Exhibit C: Tom MaherasThis one's short and sweet. Maheras, who ran Citigroup's toxic-asset campaign, was asked by the committee what led him to pile on so much risk. The reason, he claims, was that's what the pros told him to do. "Based in part on a careful study from outside consultants …" he explained, "the company decided to expand certain areas of our fixed income business that we believed at the time offered opportunities for long-term growth."

He went on. "Even in the summer and fall of 2007, I continued to believe, based upon what I understood from the experts in the business, that the bank's [CDO] holdings were safe."

It's worth asking: If Maheras wasn't an "expert in the business," why was he running the business? And if he wasn't an expert, why was he paid $97 million -- ninety-seven million -- during the three years before Citigroup disintegrated? Makes you wonder what kind of money the experts made.

Suck it up and say it like it isI'd like to have sympathy for these people. But every time we hear their side, it's the same story. They didn't know. They were blindsided. It was someone else's fault. They tried to warn, but no one would listen. What's sad is they were the first to accept full responsibility for the bubble's success on the way up, but largely claim ignorance now that the cat's out of the bag. I'd call that hypocrisy.

Check back every Tuesday and Friday for Morgan Housel's columns on finance and economics.

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Morgan, thanks for another well-written and thoroughly-researched article. I'm predisposed to look to the future and to focus on solving the mess that we're in. But there are moments when, I look backwards. When I do, I find myself wanting a roster of names created of the banking "leaders" who should be made to feel very uncomfortable in America -- only by legal means. And how do they get removed from the roster? By demonstrating clearly that they regret their mistakes, by returning substantial amounts of capital ("throw it back!") to shareholders, and by using their waking hours to help fix the flaws in the system and ensure that leverage can never be so well hidden again. - Tom Gardner

The lack of shame on display from these "leaders" is appalling. No wonder we were run into a ditch! If you can't admit you're wrong, you'll never learn from your mistakes. And none of the three people detailed above seem even the slightest bit contrite.

Free markets and real, competition-based capitalism require clear guiding rules for all involved. It is the duty of the Fed, in large part, to provide that. And it is the duty of the participants to adhere to it. These three want nothing to do with that responsibility.

I would thoroughly enjoy some legal discomfort being directed their way.

Excellent article. Taibbi's quote on bribery brings up an interesting point, that perhaps we need to name and classify things based on what they actually are. Credit default swaps, from my layman's point of view, look and act a lot like insurance. Why not call it insurance? I suppose that would bring in undue regulatory burdens and collateral asset requirements upon the institutions dealing in the CDS. Of course, intentional deception for personal (or institutional) gain has another name as well: fraud.

I'm only 30, so I'm a bit young to be a curmudgeon. Yet, I "yearn for a time," no doubt mythical, when men (and women) who made gigantic, jackadoodle mistakes would simply admit it, lose the facade, lose the ideology, lose the politics, and just do the right thing: fall on their swords, and ask for mercy. As it is, in their (continued) selfishness, these leaders deny their country the opportunity to more fully learn its lesson, because their denials allow co-conspirators in the media and the livingroom to blindly continue asserting the same, bad ideas. That is why we should care to look back....

On the other hand, they are testifying before the Angelides Commission (Angelides is a relatively smarmy, and ambitious, politician from my fine state of CA). And I'm sure Rubin and Greenspan, who are not dummies, are sitting there thinking the following: "What! A! Load!! When is this politically-climbing bozo Angelides, or his commission, gonna put CONGRESS on the hot seat? I'll tellya one thing, I'M not gonna sit here and be their whipping boy and patsy!" (To be fair, Greenspan I'm sure does not think in "tellya"s.)

And in some twisted sense they're right. Because Congress bears tons and tons of blame, too, and as hypocritical and self-promoting and conceited and arrogant and self-protective and defensive as our current testifiers are..., the folks who created this commission are even more so. And as soon as one of these non-Congressional folks falls on his sword, it's all going to be HIS fault. Particularly Greenspan. So while I am appalled by his deceptions, I suspect there is some method to his madness.

HarryFu and plange01, I'm not defending Greenspan, but what you say is true because in China the governmental leadership can just designate its pasty/fall guy, and sublimate away criticism of the broader leadership, the system, itself. At least in America the politicians are forced to lie and obfuscate and fail to answer questions in front of cameras.

Are you insane? How can you say "free-market" and inferred government rules in the same sentence? Free-markets mean there are NO regulations! That is what free means. The Fed is a central planning system that manipulates the interest rates and inflates the money supply. That has resulted in ever single boom/bust cycle since the Fed's founding and has caused the purchasing power of the dollar to decline over 95% since.

Just to make a simple point: if I decide to make a purchase of, say a new camera, I don't go searching for some rule maker to determine what to buy. I do comparative shopping, make a decision, perhaps bargain with the seller and, if I believe I am receiving more than what I am giving up, I will make the purchase. On the other hand, the seller will only give up the camera if he believes he is receiving more that what he is giving up. We each win! Neither one of us needed a supervisor! That is the basis of all exchange in a free market.

The truth is that Greenspan did not contract the money supply because he knew that this would cause a recession and that he would be blamed for it. So he decided to let it roll and take its own course. The problem with that is that instead of a recession we got a depression. The Fed. is usless, and the cause of the whole problem.

"the quality of subprime loan pools may be prone to rapid deterioration, especially in the early stages of an economic downturn. "

Excuse me? You don't say. So the quality of an investment is subject to the costumer's ability to buy the product? Wow, It took a Phd in Econ to come up with that. I think that is the reason they are high risk Alan. They were high risk, low quality investments all along, Alan.

You say: "It is the duty of the Fed, in large part, to provide that. "

It is the Fed. the cause of all of the risk taking and securitization. If you are a bank and you lend money, the Fed.'s inflationary policy will make unprofitabl;e for you to lend. The reason is that by the time you get paid the purchasing power of the dollar is so much lower that you end up loosing money. The only way you can lend is by unloading the debt on unsuspecting investors. Investors are at fault too, because you should never invest in a business if you do not understand their balance sheet. No one can understand the balance sheet of a bank, because they are so highly regulated they actually can get away with things no one else can. Banks are not lending today because the Fed. keeps inflating and banls have become toxic stocks so they cannot securitize the debt they hold and sell it to unsuspecting investors. Plain and simple.

The Fed. and the regulations are the problem. In a tru Free Market, there would have been no Fed., no inflation, no regulations, no bailouts, no subprime lending, no securitization and no depression. Banking is one of the most regulated industries, at what point will you realize that regulations will make things worse. Look at communist countries, they have the most regulations they are in the worse shape. We have the least regulations and we are numero uno.

Thank you for the above article about snakes, men, and women. It's nice to see that in all these years, human and reptilian natures have not changed.

These natures always have been and always will be such that rules must be put in place to at least try to curb and rein in those who listen to snakes, regardless if the information is first-hand (in my example, the woman) or second-hand (in my example, the man).

Those who listen to snakes and the snakes themselves must be punished.

greenspan must be held accountable for his major role in causing the still ongoing financial collapse that put the US into a depression that is now in its 15th month.by being fooled by wall street into lowerering interest rates far to low greenspan opened the door to hundreds of millions of unqualified people to purchases homes they would never be able to pay for. greenspan must be put in jail for life.had he been in a country like china he would have been executed long ago...

I would have to balk at the simplistic "Free Markets = No Regulation" as well.

On the simple camera purchase example - what's to keep the camera sales person and camera manufacturer from lying to you about the camera features and safety? What's to keep one camera company from buying up all the camera companies and snuffing out competition and innovation?

AIG dodged insurance regulations. Not a happy story there. With no regulation on insurance, companies would risk everything, make tons of money then, when the hurricane comes, go belly up, leave shareholders and customers in the lurch and start again elsewhere. Unless, of course, they own politicians then taxpayers bail them out.

Now, how much regulation is required, when and where, that's the real battle. The human being must be bound by some guidelines, not all of us can be trusted.

It seems certain to me, that what is without question needed, is to form a grass roots lynch mob of hundreds of thousands to march upon Washington, akin to the likes of the kkk in presentation but of course with way cooler costumes and a focused, more meaningful agenda.

I would propose 1. Immediate Grandfathered Tort Reform in matters of arrogance and deceit committed or perpetrated by public officials, as well of those with fiduciary, investment and corporate responsibilities 2. wiping off the face of the earth, people and organizations with such corrupt ethic's as displayed and practiced by these three disgusting individuals.

3. Bring back the guillotine!!

My reasoning, Wall Street and Washington have learned nothing. Dodds latest proposals for financial and banking reform show us that. Hank Paulsens book release, and quiet movement into environmental advisement (carbon tax credit/goldman sachs), just another "In your Face" treasonous act upon the tax payers of our country, as have been the allowance by the current assigned administration officials with their allowance of these SOB's to surface and share the air with us let alone letting Rubin and Greenspan advise or speak again.

Wake up people. They are not done with us.... these are very very very bad, amoral people.....Financial Crisis Inquiry Commission.....sounds nice but sorry...it's just another farce.....I call it the double, double, double cross.

"If we do not place rules on the market place, somebody will make their own rules and enforce them on us."

We already have the court system for arbitration. Use it. The only regulation that works is the choice to take your business elsewhere. If you get taken once, put your money somewhere else. Don't bail them out. You can have all the regulations you want but if there is no consequences then they are not only useless but also protect the bad guys.

"what's to keep the camera sales person and camera manufacturer from lying to you about the camera features and safety?"

Reputation. Ratings in places like amazon. In a free-market bad businesses loose repeat costumers and in these times they don't last long since reputation gets around in the internet.

"What's to keep one camera company from buying up all the camera companies and snuffing out competition and innovation?"

Once they do that, then they have to provide the best service at the lowest price. If they do not, if they treat costumers badly, and sell low quality at high price then entrepreneurs will start new companies in order to provide bette service. Monopolies only exist if govt regulations facilitate them.

"AIG dodged insurance regulations."

Co's like AIG manipulate regulations in order to hold near monopolies, prefered statuts and snuff out competition. Regulations are there to stamp out new comptetion.

"Now, how much regulation is required, when and where, that's the real battle. The human being must be bound by some guidelines, not all of us can be trusted. "

The only thing that works is free competition, with no regulations favoring certain companies over others., with no regulations making it expensive for the little guy to enter the market and provide a better service than the big guy. All regulations do is create govt sponsor monopolies.

Excellent article. Thanks for that. Such massive widespread failure at all levels and yet these companies soar due to ongoing accounting "Magic" . The taxpayer takes the fall and the Masters of the Universe ride off into the sunset to blow up another company.

I'm tired of the anti-wall street crowd saying wall street caused this and the government had to bail them out. Obviously the government was every bit as much to blame, and this article helps bring that to light. But I agree with you that these execs cannot claim to be ignorant of the businesses they were highly paid to run. They should go down with the ship.

Go back and look at how the CFTC brought up the idea of regulating derivatives back during the Clinton Administration. They were beat down by Greenspan, Rubin, and Summers for suggesting the idea. I'm not a regulation guy but some minimal level of intelligent regulation needed to be inacted and the Three Stooges, who thought they knew it all, conned Clinton, Congress, and the American public and are still doing so to this day. They should all be in prison for facilitating what happened in 2008.

It seems funny to me that before this so called bubble burst.A lot of the guy's, including myself would talk about things at lunch and it often led to the fact that money was to cheep and boy are these kid's going to be supprised to see how high their adjustable rate mortgages will skyrocket when the loans reset at a higher rate.get ready to see a lot of homes for sale. well here we are , and most of the guy's i'm talking about have only high school or maybe tech school educations. Gee could it be that the country was led down this path on purpose.I guess it would cost another trillion or so to find out.

Let's be clear here, that there was very little in the room in the way of virtue. Rubin was Dem, Greenspan very Rep, but they managed to work together very well paying absolutely no attention to the needs of the country. Who won't be called to testify will be Chuck Schumer, who is as able a scumbag as any, and at the the start of the melt-down went out of his way to assure his NY banker constituents that he would be in their court making sure that they would not be held accountable. Worked pretty well so far. Diss Bush/Cheney, but don't pretend that Dems didn't willingly climb on board as long as it was a good party.

Thanks for the great article. It's nice to see some actual journalism, where a writer doesn't take a side, but merely observes and reports the facts & inconsistencies of a given subject. Greenspan and Rubin were but two members of a larger gang of economic and financial know-it-alls who turned a collective cheek to common sense and reason. I'd like to see this become the first of a series of articles covering more members of the cabal. My suggestions: former Sen. Phil Gramm, Rep Barney Frank, Sen. Charles Schumer, Sen. Richard Shelby, former Treasury Secretary John Snow, then NY Fed governer Timoth Geithner, and Vikram Pandit. That's by no means an exhaustive list, but merely a good start.

Wanted - a job where I can make $15MM a year with "no operational duties," or better still, one where I can haul $32MM a year for mindlessly following the guidance of "expert consultants." Gee, I don't even need it for that long - 6 months, tops, and then someone else can have it.

As far as CDSes, call'em what they are - gambling. And in the case of naked CDSes, they're no different from track betting - wagering on the outcome of something one doesn't own. I think life gets pretty tough for bookies who can't cover.

Further to the comments of ARJTurgot and dcrednek, I think some very interesting reading could be produced by examining the relationships between congressmen from major "financial center" states and districts (NY, CT, MA come to mind), the large financial institutions in these districts, the campaign contributions from said institutions to said politicians, and the subsequent legislative/regulatory behavior of said politicians.

I somehow doubt that the facile "it's all the Republicans' fault" notion will hold up very well under this scrutiny (not that anyone in this discussion is pushing that notion).

Yes, nice article. Very much in the same grain that many other articles are also being written about nowadays. I think there are two other things it would be more constructive to focus on now than this. First, why are we even asking these yahoos questions anymore? They helped construct these bubbles, deregulated, and then opened the federal reserve so their wunderfriends could pay themselves bonuses after the crash. The fact that that they are still up there, explaining themselves, speaks more to the fact that Congress still does not get it (or chooses not to) and still is beholden, and still plans no change. If Congress had a party and didn't invite these financial apocalyptic horsemen, then Wall Street would know the gig was up and would be raising hell. Second, where was the financial press? Where was TMF? Interview the people who got it. Congress isn't.

Why are these people not being prosecuted for fraud and negligence? Why are they not fined and imprisoned for requiring public funds to remain solvent?

It is *absolutely* fine with me to have NO REGULATION, but firms that make stupid gambles need to be allowed to fail, and the people who lead them there [to failure] and commit fraud (or other crimes) should be imprisoned.

Good read. Unfortunately this is life in America for many. Shame? Not when money is at stake. And it is not just the wealthy.The tea party folks including Palen, are upset because the have-nots are getting an insurance break and they "may"be indirectly contributing to a charitable act.

Seems like Greenspan would have been criticized by the majority who enjoyed the housing mania if he did anything to stop it.Dems and Reps loved the idea of poor people getting into homes.Homeowners loved the idea of getting rich as their houses appreciated.Why would Greenspan do anything to stop that?

Seems like Greenspan would have been criticized by the majority who enjoyed the housing mania if he did anything to stop it.Dems and Reps loved the idea of poor people getting into homes.Homeowners loved the idea of getting rich as their houses appreciated.Why would Greenspan do anything to stop that?

In general, I think I'm a free market guy and want the Feds out of my business. BUT, some of the comments on regulation vs. free market have me wondering what we're talking about. If I buy a stock, I sure am taking a risk. However, I expect the broker to actually buy the stock for me and not run away with my money. I can sue if he does that but not if there's no law against it. Is this regulation? If so, that's the kind of regulation I want. A court of law is just that, a court where it's determined if a LAW has been broken. No law, no crime.

If regulation means that companies have to tell me the truth and the WHOLE truth, then I'm in favor of regulation. If they can sell me a pile of manure and lie to me by telling me it's something else, I should be able to sue them.

So I guess what I'm saying is that I think I'm in favor of regulation if it requires a company to be completely up front and honest about their product. I'm not so much in favor of regulations that tell a company how to do business, how to make their product, etc. The market can sort that out.

Does it make sense to say that some regulation is OK, even desirable, and other regulation is not? Maybe we need to say exactly what we mean by "regulation"?

Brilliant analysis and commentary Mr. Housel. Ayn Rand pushed a bankrupt philosophy of deception her entire life. She died embracing the darker teachings of the Talmud and the Kabbalah. Mr. Greenspan is a follower.

Mr. Greenspan and his cohorts are not alone in the greatest heist in human history--some 2 trillion dollars from the American taxpayers. In comparison, the Vikings were incompetent amateurs. The establishment super rich were full participants in the heist. This is why it is impossible to prosecute these these criminals--they control the courts, the media and the legislative branches of government. They are the Establishment guarding our chicken coop. There is simply no avenue for middle America to bring them to justice.

Thank you, PickerUpper, for bringing a little sense to the "what is regulation" question.

I think in common parlance it really does refer to bureaucratic rules that have never been explicitly passed as law. This is more a democracy-versus-oligarchy question than a libertarian-versus-socialist one.

Criminal law is there to discourage people from harming others or stealing property (which includes fraud). Without this, you have Anarchy. I personally yearn for the day when the world will be made safe for anarchy, but that's still some time in the future.

Civil law enforces the need to keep promises and fulfill contracts as agreed. Without this, things are run more or less on the barter system, which may not scale well to international economies.

Regulation means putting a non-elected official in charge of the details, based on some fuzzy law. This may be good if you can't trust the cops and judges to enforce actual law, but it's really only as good as the law that charters it, since each administration can tweak the bureaucracy to their own ends.

The current congressional proposals for Regulation are about as fuzzy as they come. They will simply open up profitable exceptions for favored players. What we really need here are laws that are enforced, not layers of regulation.

@ Pickerupper - You said: "Does it make sense to say that some regulation is OK, even desirable, and other regulation is not? Maybe we need to say exactly what we mean by "regulation"

This nails the issue exactly. It's absolutely logical to say that some regulation is good and some is bad.

An example of good regulation - the minimum wage. Child labour regulations. Pesticide regulations to keep our food from killing us. Chemical regulations to keep lead out of our children's toys.

Sometimes, these regulations are burdensome to business. That's why regulations should be used only to address important issues, and not just scattered willy-nilly. That's also why regulations should be as uniform as possible, and not full of loopholes for specific corporations.

@dph192 - your definition of regulation is not particularly accurate. However, it does touch on some of the problems that can stem from regulation. This is why we need to ask ourselves if the regulation is worth it. In the current legislative issue, do we think the harm that comes from the potential regulation on banks would be more than the harm the banks can cause on their own? I think a brief review of 2008 answers that question quite clearly.

"We already have the court system for arbitration. Use it. The only regulation that works is the choice to take your business elsewhere. If you get taken once, put your money somewhere else. Don't bail them out. You can have all the regulations you want but if there is no consequences then they are not only useless but also protect the bad guys."

You live in a dreamworld and haven't studied history or thoug the ramifications. There are reasons for most laws and regulations going back to Roman times wen a system of weights and measures was instituted to stop cheating. The reason is that they are necessary for a smooth functioning of society. They evolved over a long period of time in response to problems that arose. They aren't a "conspiracy". The only country I know of without them is Somalia and they have warlords and pirates.

What regualtions and government agencies would you abolish? FDIC? (so people keep money under a mattress) CDC? FDA? Police (everyone could hire private security) Speed limits? Patent protections? (I would abolish those, by the way), the SEC and any protections against getting ripped off (that would probably cut investments by 90%) The list is endless.

By the way, Alisa Rosenbaum aka "Ayn Rand" was an aetheist who opposed public education. Without public schools I probably wouldn't have received an education. It appears to me that she was an elitist who wished for a return to the aristocracy where a few lived in castles and the rest in mud huts.

Here is a challenge for DJDynamicNC: Give us specifics about what you would abolish. The SEC? FDIC?

Do you think that everyone wants to have to do extensive research before they make any purchase and be constantly going to court to sue because they were cheated when they bought a stock or becuause their dry cleaner used toxic chemicals on their clothes that killed their child?

By the way, in some cases China has fewer regulations than us, but they pay a price for that. I'm told the air is very polluted.

I enjoyed your article, Greenspan, Rubin, and a...."..and I always "enjoy" when someone like Mr. Maheras states that he did what he did because that's what the pros told him to do..and also his comment , "Based in part on a careful study from outside consultants...".

I am always interested in knowing who the "pros" are and who the "outside" consultants were.

Do you think anyone on the committee thought about asking those questions as to who those people are? If not, why not? Those "unknowns" may have a different perspective which could enlighten the investigative panel.

Wow. That's quite a ripping article. Just when I was getting used to thinking of Greenspan with a little less adulation, comes the down and dirty on Rubin. This is the guy, UCBerkeley professor or some such, who a publication of Fidelity years ago dubbed A Traitor to His Class? (i.e., a traitor to the moneyed class) who peddles folksy economic wisdom regularly on NPR, right? I didn't realize he had a role in Glass-Steagell repeal or at C. Quite a partial/potential revelation. Thank you Morgan.

Xetn should look at history a bit more. Boom/bust cycles were much more frequent in the US before the establishment of the Fed and other regulations during FDR's administration. The reduction of regulation under Grandpa Reagan, and subsequently (yes, including under Clinton, once dominated by a Republican Congress) seems surely to have led to this latest crisis. Other countries also had massive boom/bust cycles, including Holland (eg the tulip bust), the UK (eg South Sea Bubble), Russia under the Tsars, etc.

Perhaps the competition we most need is between economic theories. The collapse of communism has left only capitalism, tempered in some places by socialism. Is it a coincidence that those economies tempered by socialism seem to have suffered less from this crisis?